Debate over Democrats’ tax plan heats up

A hearing at the statehouse tonight gives the public a chance to tell legislators what they think of a bill that would dramatically change Iowa’s income tax system. A half-dozen lobbyists got to publicly air their thoughts Monday.

Democrats say their aim is to provide a tax cut to "working families." The House Ways and Means Committee opened review of the bill on Monday by giving lobbyists in the room a chance to speak.

Andy Warren of the National Federation of Independent Business argued the plan will harm many Iowa small business owners because taxes will go up on households with an annual income above $125,000.

"These are some of the most challenging economic times our state has faced. My membership alone will tell you how the ’80s were a breeze compared to what we’re going through right now," Warren said. "The very last thing small business owners need in this state is a tax increase."

Iowans for Tax Relief president Ed Failor, Junior, suggested the plan was an attack on Iowa business owners. "The very people in Iowa that create most of the businesses…who create the jobs, who sign the fronts of paychecks instead of the backs of paychecks…we’re going to take more money out of their paychecks each and every day," Failor said.

But Jan Laue of the Iowa Federation of Labor argued the bill provides a tax cut to the "vast majority" of working Iowans. "For too long, we have put too much emphasis on those at the top end and they’ve been getting all the breaks," Laue said.

Victor Elias of the Iowa Child and Family Policy Center was another fan of the plan. "We applaud the fact that the majority of Iowans would get some reduction in their tax rates (because of) this. I think if you recall the last time we had a major income tax change in the law of this sort of magnitude was in the mid-90s," Elias said. "The vast majority of that benefit went to the top 20 percent of income earners."

Dave Roederer, executive director of the Iowa Chamber Alliance which represents the 16 largest chambers of commerce in the state, told Democrats the state’s income tax system is flawed, but he argued their plan isn’t the answer because about 80,000 Iowans would see their taxes go up. "We encourage you to look a little deeper," Roederer said.

The bill also boosts child care tax credits as well as tax breaks for elderly and blind Iowans. The entire tax plan could be debated in the Iowa House later this week.

Click on the audio link below to hear lobbyists’ comments on the bill during a House subcommittee meeting early Monday afternoon.